ONLINE TRADERS TO CONTRIBUTE BILLIONS, WITH GST ACT AMENDMENTS
Customs to tax foreign digital service providers
FOREIGN digital service providers will soon be taxed for their services in Malaysia as authorities look to amend tax laws. Customs Department directorgeneral Datuk T. Subromaniam said they were in talks with the Finance Ministry’s Tax Unit to tax these service providers to level the playing field between foreign and local digital economy players.
In terms of imposing the Goods and Services Tax (GST) on them, Subromaniam said it was a requirement to have a place of supply, which digital service providers did not have, thus, the lack of tax imposed.
“Foreign digital service providers receive direct payment for their services, but they are not taxed.
“Once provisions are amended, we have a legal basis to tax them,” he said at the GST Conference 2017 here yesterday.
He said the process of amending tax laws would kick off at the next Dewan Rakyat sitting next month.
Subromaniam said taxing foreign digital service providers could boost the country’s revenue as the government was targeting additional collection of a few billion ringgit from the digital economy.
On examples of foreign service providers to be taxed, he said those who sold software and online shopping sites, like Lazada and alibaba.com, would likely be required to adhere to tax requirements soon.
On GST, Subromaniam said the government was on track to collecting at least RM42 billion this year, RM1 billion more than last year’s collection.
“GST is becoming increasingly important to the economy. Collection has shown improvement parallel with the country’s GDP (gross domestic product) growth.”
He said there were some leakages in terms of businesses not registered, but since its implementation in April 2015, 453,000 businesses had registered to pay GST.
In comparison with the Sales and Services Tax, he said, only 60,000 businesses were registered.